237 A.3d 369
N.J. Super. Ct. App. Div.2020Background:
- On New Year's Day a patron, James Corley, shot and killed Roger Pickett inside Moore's Lounge (EMRO, Inc.). Corley was convicted of aggravated manslaughter.
- Pickett's estate sued EMRO alleging, among other things, that EMRO allowed Corley to enter armed, continued to serve him while intoxicated, and negligently hired, trained, supervised, and retained staff who failed to prevent the shooting.
- EMRO sought defense and indemnification from its insurer, Northfield; Northfield denied coverage invoking an assault-or-battery exclusion that also excludes "any act or omission in connection with the prevention or suppression of such 'assault' or 'battery.'"
- EMRO and its insurance producer settled the estate's claims; EMRO then sued Northfield for indemnification of the settlement and defense costs; Northfield moved for summary judgment.
- The trial court granted summary judgment to Northfield; EMRO appealed arguing the exclusion is ambiguous and does not unambiguously bar negligent-hiring/training/retention claims.
Issues:
| Issue | Plaintiff's Argument (EMRO) | Defendant's Argument (Northfield) | Held |
|---|---|---|---|
| Whether the assault-or-battery exclusion bars EMRO's claim for defense and indemnity for the estate's negligence-based claims | Exclusion ambiguous; negligence claims (hiring/training/retention, failure to maintain safe premises) are separate and covered | Exclusion unambiguously excludes bodily injury "arising out of" assault/battery and expressly includes acts/omissions in connection with prevention or suppression, thus covering alleged negligence | Court held the exclusion unambiguously bars EMRO's indemnity and defense claim |
| Whether the policy is ambiguous as to negligent personnel-management claims | Ambiguity requires construing in favor of insured; L.C.S. supports coverage where negligence unrelated to assault | Insurer bears burden; policy language plainly covers acts/omissions failing to prevent/suppress assault | Court found no genuine ambiguity and enforced the exclusion as written |
| Whether L.C.S. (coverage) or Stafford (no coverage) controls | Relies on L.C.S. to argue that negligent acts unconnected to an assault fall outside the exclusion | Relies on Stafford and persuasive out-of-state authority to show similar exclusions bar such negligent-failure-to-prevent claims | Court distinguished L.C.S. on its facts and followed Stafford and other authorities, affirming exclusion applies |
Key Cases Cited
- Stafford v. T.H.E. Insurance Co., 309 N.J. Super. 97 (App. Div. 1998) (held assault/battery exclusion—with language covering negligent actions—barred insured's indemnity claim)
- L.C.S. Inc. v. Lexington Insurance Co., 371 N.J. Super. 482 (App. Div. 2004) (held insurer owed defense/indemnity where negligence alleged could be independent of assault/battery)
- Templo Fuente de Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 224 N.J. 189 (2016) (principles for policy interpretation; no strained constructions)
- Abboud v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 450 N.J. Super. 400 (App. Div. 2017) (insurer must show exclusions apply; exclusions enforced if specific and plain)
- Flomerfelt v. Cardiello, 202 N.J. 432 (2010) (rules on enforceability and narrow construction of exclusions)
- St. Paul Surplus Lines Ins. Co. v. 1401 Dixon's, Inc., 582 F. Supp. 865 (E.D. Pa. 1984) (interpreting similar exclusion to bar coverage for injuries arising from failure to prevent/stop assault)
- First Financial Insurance Co. v. GLM, Inc., 88 F. Supp. 2d 425 (D. Md. 2000) (similar exclusion held to preclude coverage for negligent security/hiring that allowed assault)